Bill passes House by biggest margin ever

Published 10:00 pm, Sunday, April 3, 2005

The Tulalip Tribes want to collect a portion of the sales taxes generated at Quil Ceda Village north of Marysville to pay for maintenance and services.

The Tulalip Tribes want to collect a portion of the sales taxes generated at Quil Ceda Village north of Marysville to pay for maintenance and services.

Photo: Karen Ducey/Seattle Post-Intelligencer

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Shoppers cross the street in front of Wal-Mart at Quil Ceda Village. The retail center also has a Home Depot, a casino and an outlet mall set to open in May.

Shoppers cross the street in front of Wal-Mart at Quil Ceda Village. The retail center also has a Home Depot, a casino and an outlet mall set to open in May.

Photo: Karen Ducey/Seattle Post-Intelligencer

Tulalips' bid to collect sales tax from Quil Ceda gains support

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QUIL CEDA VILLAGE -- It's barely 2:30 p.m. on a rain-soaked Thursday, but already parking is scarce outside the Wal-Mart here, in this booming business park just off Interstate 5 north of Marysville.

Among the flock of shoppers pushing carts back to a sea of cars, Ernie Fortney, 62, an Arlington salesman and regular customer of this slice of commercial suburbia, is willing to give the Tulalip Tribes' pitch a chance.

At first, he's resistant to the idea. But when told the essence of the tribe's reasoning for why it -- not Snohomish County -- should receive the local portion of taxes generated from non-food grocery items and other goods sold by the big box and convenience stores and other non-tribal businesses here, Fortney flips positions like the bad wheel on his shopping cart: [Note: This story has been corrected to make it clear the tax applies to non-food grocery items]

"I don't have a problem with it. If they're going to use (the tax revenue) to keep this a place where people want to come and spend their money, why should I?"

Opponents can ramble off several reasons, but as with Fortney, state lawmakers are now considering the tribe's proposal -- which in recent years has become a perennial bill before the Legislature -- like never before.

Already approved by the House this year by its biggest margin ever (93-3), the measure -- House Bill 1721 -- not only would mean millions of dollars in future revenue for the Tulalips, it would also set a precedent for Native American tribes around the state, and likely the nation.

The bill is now being considered by the Senate Ways and Means Committee, which faces a deadline today to pass it -- and any other fiscal bills that members want to be heard by the full Senate -- out of committee.

The measure would have the state recognize Quil Ceda Village -- now a federally recognized "political subdivision" of the tribe -- as a municipality, a first-of-its-kind designation for such a tribal enterprise in this state or any other.

And, like any other city in Washington, Quil Ceda would be allowed to receive a portion of the local-option taxes generated from sales within its boundaries -- revenue that now goes to Snohomish County.

For at least five years, the tribe has proposed that Quil Ceda itself should receive such tax spoils from its wildly successful, and still growing, business park located within 2,000 acres west of Interstate 5 that the federal government has taken into trust, and off local tax rolls, for the tribe.

After all, the tribe argues, it is the Tulalips who have shouldered the $45 million in costs to put in the roads, sewer, water and power lines needed for Quil Ceda. And it's the tribe that continues to provide the basic services and maintenance to a "village" that has created some 3,000 mostly non-tribal jobs.

For one, the county provides ample services to the tribe paid for directly by taxes generated from Quil Ceda, they say. County-owned and -maintained roadways lead to the park. The county's fire and police departments serve the entire Tulalip Reservation. And county police now have to deal with thousands more incidents per year at Quil Ceda that have been created since the Tulalips' new casino opened there two years ago, county officials say.

And just because it is federally recognized doesn't make Quil Ceda "a city" under Washington law, opponents say.

But to some, it's the potential precedent the bill would set, not the lost tax revenue, that causes the most concern.

If passed, they say, what would stop any of the 28 other federally recognized tribes in Washington from doing the same thing as the Tulalips -- creating a tribal "city?"

And if that happens, opponents say, the Wal-Marts, Home Depots and other big-time developments simply will stream onto tribal lands, where they aren't subject to traffic impact laws, clean air requirements, building standards, the Growth Management Act or other typical regulations.

With two banks, a gas station, a chamber of commerce office, a string of convenience stores, big retailers such as Wal-Mart and Home Depot, a casino and an outlet mall set to open in May, there's no doubt Quil Ceda Village is a huge success.

So much so that the Tulalips were able to get the federal Interior and Treasury departments to designate the business park as a "political subdivision" -- essentially a municipality -- of the federally recognized tribe.

Experts say they know of no other instance of a tribal venture -- and only one other case nationally -- in which the federal government has offered such a designation for a city: Washington, D.C.

The tribe notes it took eight years to gain the federal designation for Quil Ceda Village.

For opponents to say the current bill, which would create a new section of state law allowing "any Indian tribe that has a city ... to administer and collect tax," would suddenly open the floodgates to all tribes is ridiculous, supporters say.

"It takes eight years to go through the (federal) process, so we have ample time" to study the issue, said state Rep. Ross Hunter, D-Bellevue, the bill's primary sponsor.

Not only is the bill also narrowly tailored for the Tulalips' Quil Ceda Village venture, supporters add, but it's also a "pilot project" that requires lawmakers to re-examine the matter down the line. Any other tribe seeking similar taxing authority would have to win its own legislative approval.

Supporters also point out the state wouldn't lose a dime under the proposal. The Department of Revenue would still get its 6.5 percent take in sales taxes. Community transit in Snohomish County would still garner a .9 percent tax on each non-tribal sale.

The only difference would be that Quil Ceda, the municipality, would get 0.85 percent of the 1.0 percent local-option tax now collected on non-tribal sales by the county. The remaining .15 of that 1.0 percent sales tax would go to Snohomish County.

Under state estimates, the county would lose about $710,000 this fiscal year and $1.5 million from 2005 to 2007. Should the park's outlet mall open on time, the county would also lose out on an estimated $1.3 million through 2007.

The tribe, meanwhile, would gain about $862,000 this year; $1.85 million from 2005 to 2007; and an additional $1.6 million over the same time if the outlet stores are in place. It's money the tribe and its supporters say Quil Ceda would use for continued maintenance and services.

"In order to create continued growth, we must have access to continue revenue streams ... just as other cities do," said Caldie Rogers, president of the Marysville-Tulalip Chamber of Commerce.

But Tom Mitchell, co-president of the Marysville Tulalip Community Association, a group of non-tribal Tulalip reservation residents and others, warned lawmakers last week the bill "most probably is unconstitutional."

That's because it would allow tribal governments to tax non-tribal citizens, creating taxation without representation, Mitchell says. And if approved, he said, the measure "will be contested as a matter of law."

Still, after winning the most House support ever, the bill's prospects seem better now than in past sessions. For the past two years, the House approved the measure only to see it die in the Senate Ways and Means Committee. Former committee chairman Republican Sen. Dino Rossi was an opponent of the bill. Sen. Margarita Prentice, D-Renton, now chairs the committee.

"I realize that I'm a Democrat and considered a friend of the tribe," Prentice said last week. "But I'm very reluctant to move this without some serious thought. I'd have to be convinced we're not going to do any long-term harm everywhere in the state."